After 8 years, the real estate market is finally looking normal again

FORTUNE — Real estate investors are likely suffering from financial whiplash after the wild rise and fall of home values over the last 10 years.

The beginning of the last decade saw an unprecedented spike in real estate prices, which culminated in the bursting of the real estate bubble in 2006 and a financial crisis to boot. Then came the crash, and prices fell precipitously, with the Case-Shiller Housing Index losing 33% from its 2006 peak to the 2012 trough. But nearly just as quickly, investors flocked back to real estate as they realized that getting in at the bottom could be a great source of profit. Since the beginning of the housing recovery two years ago, the Case-Shiller index has regularly shown the national real estate market getting more than 10% pricier on a year-over-year basis.

This rapid appreciation in prices has caused the inventory of homes on the market to shrink, as prospective sellers are wary of jumping into what looks like a buyers’ market. This dynamic can be especially frustrating for first-time homebuyers who face the double threat of banks wary of lending to anybody but the most creditworthy and homeowners wary of selling while prices look to be on their way up.

But new data shows that the rapidly rising home prices we saw in 2013 are expected to slow considerably this year. Historically, home prices tend to appreciate only slightly faster than inflation, and there’s reason to believe that the market will settle into this pattern once again.

Last week’s Case-Shiller data measuring January home prices, for instance, showed a third straight month of slight declines in national home prices on a month-over-month basis. While the index still showed that prices rose by double digits compared to last year, the fact that home prices have stopped appreciating on a month-to-month basis signals that valuations will begin leveling off.

Furthermore, data released Monday from real estate valuation firm Clear Capital — which is more up to date than the Case-Shiller figures — shows that non-seasonally adjusted real estate prices remained flat nationally during the winter of 2014 and that prices even fell in some regions of the country like the Midwest. The Clear Capital figures aren’t seasonally adjusted, so poor winter weather likely depressed activity in some parts of the country, but the data still suggests that the rapid price increases we saw in 2013 won’t be a factor in 2014.

The Clear Capital data also indicates that one of the main stories of the real estate recovery — cash-rich investors buying up single-family homes for rock-bottom prices — could be coming to an end. According to the Clear Capital report:

Low price tier home sales (homes selling for $95,000 and less) have fueled the recovery over the last two years. This deeply discounted sector attracted enough buyers to drive prices up 31.8% from the bottom of the market in 2011. Over the last quarter, however, low tier home price gains slowed to just 1.2% — a big difference from 3.7% a year ago. Stabilization, with rates of growth not seen since November 2011, could motivate first time and move-up home buyers to re-engage.

If indeed this rapid price appreciation in the low price tier homes is coming to an end, that could signal the retreat of the investor class from the single-family market and an opportunity for first-time homebuyers relying on mortgage financing to take a larger role in the real estate market going forward.

Finally, there are indications that the market is finally responding to the price increases of the past couple of years by getting more inventory up for sale. This comes from builders ramping up production (new construction has increased nearly 80% over the past five years), and from homeowners and banks realizing that the property they own isn’t likely to continue to increase in value at the rapid pace it has the past two years. Trulia Chief economist Jed Kolko has tracked seasonally adjusted housing inventory and measured an 8.4% increase in inventory on that basis in 2013, and non-seasonally adjusted data shows that inventory has continued to increase in 2014, despite the cold winter weather.

In other words, it appears as if supply and demand are meeting each other in the middle after years of strange dynamics dominating the real estate market. Buying or selling a home is not anybody’s idea of a fun time, but as 2014 real estate season begins to rev up there might be fewer headaches associated with the market than there have been in many years.